The Ultimate Real Estate Investment in TorontoOctober 25, 2021
Condos are less expensive than a house or townhouse—That’s why they are a great entry-level for first-time home buyers or investment property.
Therefore, investing in a condo is a great choice when looking for a return on your purchase.
Historically, investors have profited from buying, renting, flipping and selling condos in Toronto.
Let’s review some important facts about buying an investment property in Toronto.
Getting a mortgage for an investment property isn’t the same as borrowing for your primary residence. Firstly, you’ll need at least 20% of the purchase price for a down payment. Also, a portion of the income you will get from rent will be considered in qualifying you for a mortgage, and the lender usually calculates it at 80%.
Another thing I always tell our real estate investors is to make sure they have long-term goals when it comes to calculating your return on investment. Expecting to profit in a short period can increase your risk. Even though the market is robust now, no one can predict the future.
Let’s look at long term goals and ROI (Return on Investment)
We typically use different calculations and tools to calculate the returns on property investments. Here are some important ones to consider:
Cash flow is the net amount of cash moving in and out of an investment
Calculation: Income – operating expenses – financing costs
Capitalization Rate (cap rate) is the rate of return on a real estate investment property based on the income that the property is expected to generate. Calculation: Operating Income / Purchase Price
Return on Investment (ROI) – a performance measure used to evaluate an investment’s efficiency or compare the efficiency of several different assets and calculated by adding the cash return + mortgage pay down + capital appreciation.
We have seen many people do very well with new construction properties.
Buying and renting out a pre-construction condo in Toronto is still a solid real estate investment. When you buy a condo during the pre-construction phase and rent it out – with the intention to hold on to it long-term – at least 5-10 years – you can almost always guarantee a solid return on your investment.
To learn more about our pre-construction condo projects in Toronto, give us a call at 416-566-2850 to learn more. We are here to help you every step of the way!